Trade of the Day: Cypress Semiconductor (CY)

Semis have been a strong play in August, and this stock looks to continue the trend

Cypress Semiconductor (CY) announced a quarterly cash dividend this week, which has all the fundamental investors excited, but there’s a treat for the technical traders too: CY’s chart shows it’s setting up for a short-term move.

At the Aug. 20 close, Profit Scanner powered by Recognia discovered that a bullish Ascending Continuation Triangle pattern appeared on CY’s chart indicating that a 13% to 15% higher move is possible in the next 36 trading days, or by early October.

CY’s close at the technical event was $10.90 and the pattern’s target range is $12.00 to $12.30. The Ascending Continuation Triangle occurred on volume of 2,262,836 shares traded.

Lending credence to this short-term run, Profit Scanner shows that several bullish events have appeared on CY’s chart in recent weeks including the following:

Traders should be aware that resistance for CY resides at $10.93, so a close above that level should provide an all-clear. Conversely, support for the stock is at $10.22, which CY has held nicely for several sessions.

Still, it’s important to set stop-losses in the event of a reversal, and Profit Scanner has identified a close below $10.27 as a medium stop appropriate for the average trader.

CY is expected to report quarterly earnings in mid-October, so if this pattern is successful it should play out before then.